This guide, which is intended to help further the EHRC’s long-term goal to improve transparency in pay systems, aims to help smaller businesses analyse any pay gap they may have and make any necessary changes required by law.

The publication of this guide follows the release of new research, published last month by the Chartered Management Institute, which found that, at current rates of change, the gender pay gap in management positions will not be eradicated until 2067.

Last month, I summarised the Government’s approach for ensuring that all new homes are ‘zero-carbon’ by 2016. However, according to recent reports in The Guardian newspaper, this 2016 target is set to be scaled back following pressure from the housebuilding industry.

According to The Guardian, housebuilders have warned that compliance with the Government’s proposals would be “too expensive and impossible to implement for many flats, and would result in a slump in the rate of homes built.” Consequently, according to The Guardian, the Government may water down its target.

However, the Home Builders Federation has responded to these reports by saying that the housebuilding industry is committed to meeting the zero-carbon target, though it wants the Government to ensure that the definition of ‘zero-carbon’, which is due in the next few months, is “practical, deliverable and affordable” so that the cost of building new homes does not accelerate.

The Guardian’s claims appear to be based on comments made by, conveniently, unnamed senior figures at the Department of Communities and Local Government; and, so far, the Housing Minister Grant Shapps has said nothing to confirm or refute this supposed change in the Government’s stance. We will wait to see what happens, but one thing is for sure: any weakening of the Government’s commitment to its zero-carbon homes plan is sure to anger environmental groups.

The Association of Investment Companies (AIC) has recently published guidance for directors of investment companies to help investment company boards obtain the most appropriate D&O policy. Whilst aimed at investment companies, the guidance highlights principles that directors of other types of company may find useful.

Key points of the guidance worth noting include:

• The board of directors should always remain responsible for arranging their own D&O policies so that they are aware of what is and what is not covered. This is particularly important when subsidiary companies are involved under a group company structure.
• If the board is made responsible for putting in place the D&O cover this will help to ensure that all directors on the board are aware of what losses can and cannot be claimed against.
• Directors should receive advice on the D&O policy before making a claim as inaccurate reporting may lead to insufficient recoveries under the policy.
• Any new directors should be provided with a copy of the D&O policy.
• Consideration should be given as to what effect a merger or acquisition may have on the D&O policy.

If you would like further information on D&O policies, or to see the AIC’s guide in full, please do not hesitate to contact Emma Cameron, or another member of the corporate team at Matthew Arnold & Baldwin LLP.

Background

Historically, all forms of contingency fees in litigation (whereby payment of the solicitor depended on the results) were considered to be unlawful. It was felt that they could lead to a conflict of interest between the solicitor and his client. In 1990 CFAs (Conditional Fee Agreements) were introduced which allow for the amount of any fees to be increased, in specified circumstances, above the amount which would be payable if it were not a conditional fee agreement. All other forms of contingency fee agreements are unlawful.

CFAs are often referred to as “no win, no fee” agreements. Essentially the solicitor agrees to forego payment of his fees until the court decides the matter. In the event you win he is entitled to his fees at his normal rates together with a success fee being a percentage of his normal rates, subject to a maximum 100%. Significantly, not only the normal rates but also the success fee are recoverable from the other side in the event you win in the proceedings. In the event you lose the solicitor will not recover any fees from you. You will only be liable to pay disbursements, which will include Counsel’s fees (although rarely some Counsel  will also proceed on CFAs).

A success fee must be expressed as a percentage uplift on the amount which would be payable if there was no CFA. The percentage uplift of the success fee must be reasonable. The reasonable success fee should in general be calculated so that it does not exceed the amount of the fees at risk ie. the conditional fees. On a detailed assessment of costs the Court will consider the reasonableness of the success fee. If the Court finds the level of the success fee to be unreasonable it will reduce it accordingly.

 The legal representatives acting for the client with whom the CFA is to be concluded will calculate the level of the success fee. There are two elements which go into the calculation of a success fee:

• The risk of losing the litigation (the risk element).
• The cost of funding the litigation (the postponement element).

The legal representative will need to calculate separate percentages for these elements which, together, must not exceed 100% of the amount which would normally be payable if there was no CFA.

Discounted CFAs are becoming increasingly common. This is where the solicitor will be paid a discounted rate for his fees during the progress of the matter. In the event you win the claim the solicitor will be able to recover his fees at his normal rates together with the success fee, applied to his normal rates. If you lose the solicitor simply retains the discounted fees he has been paid during the conduct of the litigation. The court will usually take into account the fact that a reduced level of fees would have been recoverable even if the case had been lost when considering the reasonableness of the success fee.

A success fee is seen as the just reward for the solicitor taking the risk of either not being paid at all; or being paid significantly less than their usual going rates (depending on the terms of the CFA) if the client should lose the case.

The Peacock decision

The recent decision in Peacock v MGN Ltd [2010] EWHC 90174 (Costs) on a detailed assessment of costs reconsidered the issue of staged success fees.

In Callery v Gray (2001) EWCA CIV 1117 Woolf CJ explained the logic behind a staged success fee:

“The logic behind a two-stage success fee is that, in calculating the success fee, it can properly be assumed that if, notwithstanding the compliance with the protocol, the other party is not prepared to settle, or is not prepared to settle upon reasonable terms, there is a serious defence [emphasis added]. By the end of the protocol period, both parties should have decided upon their positions …”

In Peacock the success fee was staged so that it was:

• 100% it the claim proceeded to 28 days after service of the defence and beyond.
• 50% if the case settled after proceedings were issued, but before 28 days after the defence is served.
• 25% if the case settled before proceedings were issued.

Proceedings were issued on 2 September 2008, the defence was served on 24 October 2008 and a settlement was reached and embodied in an order dated 30 November 2009. The order included a provision that the defendant would pay the claimant’s costs on the standard basis, to be assessed, if not agreed.

MGN disputed the reasonableness of the 100% success fee. In advancing an offer of 43% success fee, the thrust of MGN’s argument was that where the success fee is staged, it is unreasonable for this to be fixed at 100% at an early stage in the proceedings, such as 28 days after service of the defence. MGN further advanced the proposition that the risk assessment undertaken by Carter Ruck (solicitors acting for Peacock) is not “bespoke” but is akin to block-rating, because if the firm decides to accept a case funded by a CFA, a “one-size-fits-all” success fee of 100% is invariably agreed at the final stage.

MGN did not contend that the “discount” from 25% to 100% “ran out too soon”. This was wise given that the case of KU v Liverpool City Council (2005) EWCA Civ 475 plainly contemplated the second stage of a two stage success fee taking effect on service of the Defence.  

Master Campbell held that the decision to enter into the staged success fees was reasonable. Once the claim had got to the stage where it was apparent that the defendant believed it had a “serious defence” then it was reasonable for the level of success fee to rise in accordance with the other side’s view of the merits and the defendant’s apparent belief that the claim would fail.

He derived the following propositions in relation to the arguments in the case:

• A party who contends for a high success fee in a matter that has gone a long distance towards trial (the situation here) stands a better prospect of having that fee approved if a lower success fee would have been payable had the claim settled earlier (precisely what could have but did not happen here). A party who enters into a CFA with an unstaged success fee which is payable at that level irrespective of whether the case settles quickly or slowly, will find it more difficult to justify the fee. For that reason, the “high” success fee, having been staged so that it would have been less if the case had settled “quickly”, is justified;
• It is open to the Claimant to choose the date of staging. Since in Ku the Court of Appeal contemplated a low success fee, “perhaps until the service of the defence” and to have the benefit of a high success fee in the cases that did not settle early, Master Campbell considered there was nothing unreasonable in the Claimant choosing 28 days following service of the Defence as the date on which the 100% success fee would come into effect; this gave MGN an extra four weeks above and beyond the period mentioned by Brooke LJ in Ku before it would assume any potential liability for a 100% success fee.
• If a defendant denies liability and serves a Defence the Court can infer that the defendant must believe that it has a realistic chance of the defence succeeding at trial. Having not settled the matter in the protocol period and having thereafter served a Defence giving the particulars of justification in the manner that it did, it is reasonable to suppose that MGN believed it had a “serious defence” in the nature contemplated by Lord Woolf in Callery v Gray.
• A court should be cautious about a suggestion that a claimant firm has not undertaken bespoke risk assessments when fixing success fees but rather, has used a “one size fits all” staged success fee. Such arguments will be put to strict proof and require cogent evidence.

Upon entering into a CFA notice must be given to the other parties to the dispute as soon as possible and in any event within 7 days of entering into it or, where a claimant enters into a CFA before sending a letter before claim, in the letter before claim. The only information that must be provided to the court and the other parties is the date of the CFA and the claims to which it relates. The party with the benefit of the CFA does not need to reveal the terms of it or the applicable success fee.

Lord Justice Jackson’s review of civil litigation costs published in January 2010 included the proposal that success fees should cease to be recoverable. For further information on Lord Justice Jackson’s report see Karen Jacobs blog on 14 January Lord Justice Jackson’s report on costs in civil litigation. However, for the time being at least the current CFA regime remains.  

Comment

Beth Lovell, solicitor at Matthew Arnold & Baldwin, comments “the Peacock case is a further example of the Court’s willingness to penalise in costs a losing party who has passed up the opportunity to settle the claim at an early stage in the proceedings. Entering into a CFA early on and giving notice to the other side, as required by the rules, can be a real tactical weapon in settling claims early in the proceedings. A foolish defendant that carries on regardless runs the risk of paying significant sums in costs with hefty success fees on top”.

M-Tech’s objection here was that Oracle had conducted its business in a way in which it was not possible for traders to ascertain whether the goods had originated inside the EEA or outside. In particular, it had deliberately chosen not to make publicly available its database of product serial numbers – and those could have identified where the goods had been first marketed.

The High Court had awarded Oracle summary judgment but on appeal the Court of Appeal agreed that M-Tech had an arguable case. It thought that it was possible that Oracle’s actions amounted to an artificial partitioning of the European market, contrary to the Treaty on the Functioning of the European Union (previously the EC Treaty), with the aim of maintaining price differences in each country rather than any legitimate wish to protect its brand. The Court of Appeal did not award victory to one party or the other, but said that M-Tech’s arguments warranted a full trial and the case should probably end up being referred to the European Court of Justice to make a ruling.

SailPoint has identified a three-step plan to ensure business information is treated more valuably. Step one: have policies and educate workers about the treatment of confidential information. Step two: strictly limit the accessibility of certain information to particular people, and limit access when people leave the employment or change roles. Step three: conduct quarterly access reviews to see if the existing rights and privileges are necessary, especially for highly sensitive systems.

For more on their survey results, click here: http://www.sailpoint.com/news/press/press-release.php?release=70.

Providing administrative support to fee earners in the team principally through generating court documents and associated standard correspondence.

Main Duties and Accountabilities: 

To support fee earners in all aspects of their work and responsibilities to operate at optimum efficiency at all times.

To file documents and files for fee earners if required.

To arrange the timely and efficient archiving and retrieval of files.

To assist as needed with processing of new instructions using computer systems and to generate formal demands and default notices as appropriate.

To carry out searches and issue court proceedings using case management system.

To book agents to attend court hearings and to notify all parties.

To prepare witness statements using case management system.

To set up evictions using case management system.

To maintain diary entries and status notes on the case management system.

To ensure the confidentiality and security of all practice and client documentation and/or information.

To undertake any other ad hoc duties as requested, including the timely completion of various spreadsheets and statistics.

Skills & Experience:

Excellent literacy

Basic IT skills

Familiarity with Word and Outlook   

Personal qualities:

Enthusiasm

Attention to detail and accuracy

A professional and efficient approach to work

Ability to work on own initiative

Good sense of humour

Ability to take responsibility for own work

Ability to work under pressure and to strict deadlines

Please apply with a cv and covering letter to hr@mablaw.com.

The claimants alleged that the APR stated in the agreement should be regarded as the primary figure and the monthly interest rate should be calculated from and should correspond (as closely as possible) to the APR.  They produced an expert report from a mathematician and computer expert who concluded that the APR rates on the monthly cash advance balance rate were incorrectly stated.

A regulated agreement is not properly executed unless the agreement contains all the prescribed terms.  If improperly executed, it is only enforceable by an order of the court.  The court cannot grant such an order in respect of agreements signed before 6 April 2007 and so those agreements which did not contain all of the prescribed terms are irredeemably unenforceable.  The claimants alleged that the APR was misstated and as a consequence the agreements were unenforceable.

The Judge explained that there is a very clear difference between the nature and function of the stated monthly (or annual) rate and the APR. The stated monthly or annual rate is (on its face) a contractual term.  The APR is designed to provide information to consumers and is arrived at by a complex formula designed to include not only interest rates but also other charges.  The APR is not a prescribed term.  Merely because the APR is included does not make it a prescribed term of the agreement.  The APR is not the driver of the figures and in any event,  if it were,  it would be unworkable as the APR figure only needs to be stated at the inception of the agreement.

Accordingly the claims that the agreements were irredeemably unenforceable because of an alleged mismatch between the APR and the stated rate of interest were struck out.

This case involved calculating the interest rates retrospectively, which as the Judge pointed out had “a surreal quality to it”. In the light of the series of cases which have resulted in a positive outcome for lenders, this is yet another nail in the coffin for those who seek to use the courts to bring consumer credit related claims on a very tentative and speculative basis.

Sternlight v Barclays Bank Plc and others [2010] EWHC 1865

Section 149 of the Equality Act 2010, which received Royal Assent in April, states that public authorities subject to the general equality duty must have regard to the need to (1) eliminate unlawful discrimination, harassment and victimisation; (2) advance equality of opportunity between different groups; and (3) foster good relations between different groups. Section 153 gives ministers the power to impose specific duties through regulations.

The consultation paper proposes the following:

1. Regulations on the specific duties designed to help public bodies meet the requirements of the general equality duty; and

2. The public bodies that will be subject to the general and specific duties.

The specific duties

The Government proposes the following specific equality duties:

1. Transparency. Public bodies will be required to publish equality data relating to their workforces and the services that they provide;

2. Workforce transparency. Public bodies with 150 or more employees will be required to publish, at least annually, data on equality in their workforces (e.g. the gender pay gap; the proportion of staff from ethnic minorities; and the proportion of disabled employees in the organisation);

3. Transparency in public service provision. Public bodies will be required to publish, at least annually, data setting out how they are promoting equality. This will enable citizens to compare public bodies’ equality performance and, where possible, choose between providers; and

4. Transparency about impact on equality. Public bodies will be required to set equality outcome objectives which are specific, relevant and measurable. These objectives will also enable the public to see whether a public body is meeting its own standards and achieving all that it sets out to. Public bodies should review their approach at least every four years.

Which public bodies will be subject to the equality duties?

The consultation paper states two ways that a public body can become subject to the equality duties:

• By being listed in Schedule 19 to the Equality Act 2010; and
• By carrying out public functions.

NB: Annex 5 of the consultation paper proposes adding further public bodies to those listed in Schedule 19. However, some of these bodies will only be subject to the general duty in relation to their public functions.

What happens next?

Responses to the consultation must be made by 10 November 2010, with the Government aiming to publish the results approximately three months later. The Government then proposes to bring the general and specific equality duties into force through regulations in April 2011; however, public bodies will be given a further year before they have to publish their equality objectives and state whether they are being met. Guidance explaining the general and specific duties, and what public bodies will need to do, will be published by the Equality and Human Rights Commission before the regulations come into force.

Our employment team will be closely monitoring the situation, and we will summarise the Government’s response in due course. In the meantime, if you have any concerns or questions about this or anything employment-related, please contact Adam Fuge at adam.fuge@mablaw.com, or Michael Delaney at michael.delaney@mablaw.com.

Mark Weston, a Partner at Matthew Arnold & Baldwin LLP and Head of the Online Team, comments: ‘This case shows the risks and dangers of doing business in different countries. Businesses should not stop doing business altogether in other countries, but they should exercise care and seek local legal advice. This can be especially important with online businesses.’

If you find that you suddenly need to have a document translated into another language as a matter or urgency, firstly, don’t panic! Secondly, even if you speak the language in which you require the document to be translated into, don’t think you can cut corners and save money by attempting to translate the document yourself, using nothing more than google and a technical linguistic dictionary!  Being bilingual is no guarantee of producing an accurate and professional translation. Never underestimate the fact that translating a legal document is one of the most difficult skills to develop, since it requires not only a complete fluency in another language but also a deep understanding of the national law system of that country, an understanding of the legal clauses that that country uses, together with an understanding of local culture.  This is why you often find that most professional translators limit their work to one or two fields.

Nowadays, there are many professional legal Translation Services for you to choose from.   Most offer a genuine confidential service at a competitive price.  It should effectively boil down to who can offer you the best deal for the service you require so don’t be afraid to shop around.  However, here are some points to note:

Even if you require your translation back as soon as possible, don’t be afraid to tell the agency that you do not expect to see a “rushed job”.  You do not want several different translators working on your document and thus leaving you with a hodgepodge translation.  Consistency and fluency are the keys to a successful translation.  For example, what one translator may call a contract, another may call an agreement.

Never assume your document will be treated as confidential and so don’t be afraid to labour the point.  If your document is highly confidential, say so. Many legal documents contain sensitive information; bank details; home addresses; company information.  Do not be afraid to request that your chosen translation agency limits the number of translators who have access to your document/s.  

The best legal translators you can use are those professional translators recommended by your own legal advisers. A good translation agency will normally only use experienced translators and interpreters who are mother-tongue speakers of the target language of translation. Further, they normally hand-pick translators for each job so that their experience matches your needs.

Most employed translators and interpreters are members of professional associations such as the Institute of Translations and Interpreting and the American Translators Association.

In brief, armed with the legal document to be translated and a selection of carefully chosen requirements, your chosen translation agency should provide you with a perfectly translated legal document, in your specified language of choice which meets all your requirements.

The Aims of Directive 2008/52/EC

 The Directive itself addresses 5 key issues:-

• Ensuring the quality of mediation
• Court intervention
• Enforceability of agreements resulting from mediation
• Confidentiality
• Limitation

However, its main aims are set out in Article 1 which include (i) to facilitate access to alternative dispute resolution (ADR) and (ii) to promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a balanced relationship between mediation and judicial proceedings.

Member states (apart from Denmark) must confirm to the European Commission details of the courts or authorities who will be competent (under Article 6(3)) to ensure the enforceability of agreements resulting from mediation, by 21 November 2010 and must bring all other provisions of the Directive into force before 21 May 2011.  This is so the Commission can publicise this information to make it easier for citizens and businesses to use mediation.

Mediating cross-border disputes

It is fair to say that cross-border disputes are more complex due to the different national laws and jurisdictions involved, as well as practical matters like culture, language and costs.  Even for skilled mediators, mediating a cross-border dispute is tricky.  As a result, all parties to a cross- border dispute need common rules they can rely on.  The Directive aims to ensure there is in place a high-quality process for resolving such complex cross-border European disputes.

Article 4 of the Directive requires Member States to encourage the development of, and compliance with, voluntary codes of conduct for mediators and mediator providers, together with other quality control mechanisms for the provision of mediation services. Member states are free to use any means they consider appropriate for complying with this.  Further, Member states are required to encourage mediation training to ensure that mediation is conducted in an effective, impartial and competent way.  Such details are left to individual member states.

In July 2004, the European Code of Conduct on Mediation was launched.  Although the Directive does not make specific reference to it, both the Centre for Effective Dispute Resolution (CEDR) and ADR Group are signed up to this Code.

“European Commission calls for saving time and money in cross-border legal disputes through mediation”

As the deadlines for implementation approach, the European Commission has published a press release (title above) reminding member states of the potential benefits of mediation.   The Commission emphasizes that the EU measures on settling cross-border disputes by mediation are important because “they promote an alternative and additional access to justice in everyday life”. It goes on to say that settling disputes and disagreements through the courts is not only costly and time-consuming but can also destroy profitable business relationships.  Member States are encouraged and should be allowed to settle cross-border disputes amicably.  A recent study published June 2010, “The Cost of Non ADR” found that based on a claim for EUR200,000 on average, where mediation is not used, there will be between 331 and 436 days of wasted time, with resulting additional costs of between EUR12,471 to EUR13,738 per case.

The press release also provides an interesting update on the progress of implementation to date. Estonia, France, Italy and Portugal have already notified the Commission that they have implemented the Directive, while Lithuania and Slovakia have provided notification of the competent courts for enforcing cross-border mediation settlements.

Article 11 also provides that the Commission must submit for review, a report on the development of mediation through the EU in order to assess the impact of the Directive.  The Commission must submit a report on these issues to the European Parliament, the Council and the European Economic and Social Committee no later than 21 May 2016 and the report may include proposals for amendments to the Directive.

The UK view

One final observation for thought.  The Jackson Report, published in January 2010,  firmly held the view that mediation should not be made compulsory in the UK courts, and whilst mediation was recognized as bringing considerable benefits, it was stated that parties should not be compelled to mediate.  The UK courts should however, encourage parties to mediate.  (please also refer to Tim Constable’s blog on Mediation – The Lord Justice Jackson review dated 14 January 2010 and Justine Ash’s blog on Compulsory Mediation – the European perspective dated 30 March 2010 for more information)

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘As always, it is important to ensure that Facebook is used carefully. Unsuspecting teenagers or other people using this new functionality could supply valuable information to criminals who may see an opportunity for burglary if they can easily find out when people are away on holiday.’

Please see the link for guidance.  The regulations come into force on 1 February 2011. 

The existing Consumer Credit Act regime is unchanged in relation to agreements secured on land and consumer hire agreements (although lenders may choose to comply with the new requirements in respect of agreements secured on land).

In summary, the regulations make amendments to the following:

•  The right to withdraw from the credit agreement and the requirement to provide adequate explanations.  Creditors are required to assess the borrower’s creditworthiness before granting credit or significantly increasing the amount of credit.  The borrower can withdraw from an agreement within 14 days following conclusion of the agreement or (if later) once the borrower has received a copy of the executed agreement or notification of the credit limit on a credit card.
• How to set out and calculate the total charge for credit and the annual percentage rate of charge (APR) in advertising and consumer information.
• What information to provide consumers before they enter into a credit agreement and the way in which that information must be provided. They largely replace regulations on the disclosure of pre-contractual information. The information must be clear and easily legible, and the borrower must be able to take it away to consider and to shop around if he wishes.
• What information must be included in a credit agreement and how it must be presented and the requirements on the signing of a credit agreement.
• What information must be included in advertisements for consumer credit agreements and how that information must be presented.  If an advertisement includes an interest rate or any amount relating to the cost of credit, it must also include a representative example.
• The borrower is entitled to seek redress from the creditor in certain circumstances if he is unable to obtain satisfaction from the supplier of goods or services.  This applies where s75 of the Consumer Credit Act is not applicable.

The Financial Reporting Council (FRC) commissioned the ICSA to review and update the Good Practice Suggestions from the Higgs Report that relate to non-executive directors. A previous ICSA consultation, in March 2010, revealed that there was overwhelming support for new guidance to help boards to understand and implement the Combined Code (now called the UK Corporate Governance Code). Consequently, on 29 July 2010, the ICSA published a new consultation paper on improving board effectiveness, which includes draft guidance to assist boards in implementing the Principles in Sections A (Leadership) and B (Effectiveness) of the Code.

This draft guidance makes a number of amendments to Higgs’ guidance, most notably by placing a greater emphasis on the role of the chair in creating an effective board. However, it also contains sections on several areas/issues that were not covered by Higgs’ guidance, including:

1. Role of the board. The board is expected to set the company’s values and standards, and ensure that it meets its obligations to shareholders and others;

2. Role of the senior independent director. He or she should be more prominent when the board is undergoing a period of stress, in order to maintain board and company stability;

3. Role of executive directors. The CEO should improve the standards of discussion in the boardroom, whilst executive directors should represent the owners of the business and encourage non-executives to probe proposals as an essential part of good governance;

4. Role of the company secretary. The company secretary should add value, particularly in relation to induction and development, and advise the board of any changes which could be made to governance procedures in order to improve the governance of the company;

5. Decision-making. The Board should provide clear policies and look at how good decision-making can best be facilitated;

6. Board composition. Companies should consider internal appointments for executive director posts, and prospective directors should conduct sufficient due diligence to ensure that they fully understand the company before joining its board;

7. Establishing and maintaining directors’ skills. The chair, new director and company secretary should work together to devise an effective induction programme and directors’ development programme; and

8. Communicating with shareholders and other stakeholders. The annual report and accounts should be regarded as the most important communication between the company and its shareholders, and should be used to clearly set out the company’s governance arrangements.

The consultation closes on 14 October 2010, and the ICSA will then submit the completed draft guidance to the FRC in November 2010, so that the FRC can publish the final guidance by the end of 2010.  Although the UK Corporate Governance Code applies to companies with a premium listing of equity shares, the principles and ethics underlying the Code should be followed by a much wider class of company, given the duties and responsibilities to which all directors are subject. Take, for example, the fast growing private limited company which is attracting external funding and which is working towards a listing. Behaviour in line with the Code will make transformation smoother and its absence could even jeopardise pre-listing funding, as reputation is crucial to any legitimate funder associated with a company.

 This is a device of long lineage, first noted judicially in 1769 (the same year the last wild wolf was killed in the British Isles) in Dufour v Pereira a case tried by Lord Camden (yes, the man who founded Camden Town), who amongst the “haths” in his  judgment, had this to say

“It is a contract between the parties, which cannot be rescinded, but by the consent of both. The first that dies, carries his part of the contract into execution. Will the Court afterwards permit the other to break the contract? Certainly not.”

Sounds a bit scary, a bit like a suicide pact, but in reality it’s not, it is just an arrangement where two people irrevocably agree to leave their estates reciprocally . But aren’t all wills recovocable until death, I hear you say? Absolutely, and theoretically this is no exception to the rule, being in fact the application of a prior constructive trust.

Say A and B agree to make wills leaving all to each other, subject to a proviso that if the other dies first the estate passes to X. A dies and the estate passes to B, who contrary to the earlier  agreement with A, then makes another will leaving all to Z.  On B’s death X can apply to have the gift to Z set aside, citing the agreement for mutual wills as the document that sets out the terms of the prior trust. Don’t most husband’s and wives write wills in that form? Well yes, all apart from the agreement that the wills are to be in irrevocable mutual form.

The recent case that underlined the continuing effectiveness of mutual wills involved the estates of two sisters Ethel Willson and Mabel Cook.  Mrs Cook died in 1995 having made a mutual will by agreement with her sister Ethel, who died in 2006,  having made a new will 2 months before she with provision materially different from the earlier mutual will; Ethel cut out the earlier bequests to relatives and friends  in favour of the sisters’ hairdresser, who duly received the £390,000 estate. The disappointed relatives and friends took their greivance to Court, and in a case involving allegations of undue influence and mental incapacity, the Court concluded that the sisters had made mutual wills the terms of which should be upheld, such that Mrs Fraser was required to hand back the cash.

For understandable reasons such cases rarely come to Court.  In the opinion of the solicitor acting on behalf of the disappointed family and relatives such a proposition has been upheld only 3 times in the last 80 years. Such wills are rare, falling outside many a seasoned draftsman’s experience. It’s also quite likely that should the survivor of such an arrangement subsequently make a different will the fact that the provisions cut across an earlier mutual will may not be brought to anyone’s attention. Errors of drafting or administration in this particular field can still have spectacular consequences, as this case amply illustrates. Get thee to a lawyer if you are at all concerned!

Dave Hartnett, the Permanent Secretary for Tax at HMRC, has admitted that tax inspectors were sometimes too “tough”, and that a change of approach is now required. HMRC is now expected to tell its inspectors to try to settle cases out of court, where possible; it is also planning to launch a pilot scheme involving third-party mediators, to see whether they can be used to help resolve some disputes.

So why is HMRC changing its stance now? This is a pertinent question to ask when you consider that it was only three years ago, in July 2007, that HMRC adopted its ‘Litigation and Settlement Strategy’, which stated that HMRC would pursue all tax disputes through the courts whenever it considered it had a better than 50 per cent of success – a clear statement at the time that HMRC would not enter into negotiated settlements when it felt it had a good chance of winning the dispute through litigation. It is true that HMRC faced some criticism for this uncompromising attitude, but this is certainly not the only (nor the main) reason for its change in stance. Rather, and more importantly at a time of big government spending cuts, HMRC also hopes that the move will make the department more financially efficient and free up billions of pounds that have been tied up in the aforementioned tax avoidance court battles.

However, nobody should misunderstand HMRC’s change in approach as any sort of weakening in its resolve to clamp down on tax avoidance. Mr Hartnett made it perfectly (and graphically) clear in an interview with the Financial Times newspaper this week that “If it is a strong case, we will fight to the death.”

Finally, it cannot go unmentioned that the timing of HMRC’s conciliatory approach is particularly ironic. In the week that Mr Hartnett held out a metaphorical olive branch, the deputy Prime Minister, Nick Clegg, also announced that the Government is looking at the case for a general anti-avoidance rule “to ensure that wealthy individuals pay their fair share of tax.” A case of give with one hand and take with the other?

The High Court ruled that Umbro had breached the licence by allowing Dick’s to dip into the off-field market. However, it also agreed that Hudson Bay had breached the licence by doing likewise the other way. The Court of Appeal has now agreed with the High Court’s ruling. The reasoning turned on pockets. FIFA (the regulatory body) had regulations which said that on-field clothing could not have pockets; in contrast, off-field clothes generally did have pockets. There were other differences such as the size of logos, but that was the main distinguishing design difference. Hudson Bay argued that it had asked for authorisation to stock a design without pockets, which had been agreed to by the head of Umbro’s US subsidiary. However, that person did not have actual or ostensible authority to bind Umbro UK, which was the party to the licensing agreement. That lack of authority was borne out by other surrounding facts in the case, such as the delay in executing the original agreement which had been negotiated by Umbro US so that Umbro UK people could sign it.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case is interesting because of the sporting subject matter. But it raises another more serious point. When someone wants to get something approved or agreed by the other party in a contract, they should ensure that the individual they are dealing with has authority to bind that other party. Where in doubt, this should be checked with a board director.’

In February 2010, the Court of Appeal dismissed Mr Gaines-Cooper’s application for judicial review of HM Revenue & Customs’ (HMRC) refusal to treat him as non-resident in the UK for tax purposes. Mr Gaines-Cooper, who has lived in the Seychelles since 1976, claimed that HMRC failed to interpret its IR20 guidance correctly.

IR20 sets out HMRC’s understanding of the law on residence, ordinary residence and domicile; it states that if an individual leaves the UK permanently or for at least three years, he/she will be treated as non-resident providing that he/she does not visit the UK for more than 183 days in any tax year or for an average of more than 90 days. Although Mr Gaines-Cooper satisfied these requirements, HMRC argued that an individual could not expect to rely on IR20 as it was merely guidance, and that an individual’s status depended on his/her particular circumstances. The Court of Appeal agreed with HMRC that IR20 implied that Mr Gaines-Cooper had to demonstrate a ‘distinct break’ from his former social and family ties within the UK in order to claim that he had permanently or indefinitely left the UK. It ruled that he had failed to do this when he left the UK.

This decision highlights the need for an all-encompassing statutory definition of ‘residence’ and ‘non-residence’, but for now, individuals who choose to rely on IR20 (and its successor, HMRC6) must ensure that they fall within its terms. However, the forthcoming judicial review (for which no date has been given yet) means that the Court of Appeal ruling may now not be the end of the story…

NB: I should point out that a judicial review claim allows an individual to challenge the way in which a public authority, such as a government department (in this case, HMRC), has reached a decision. It is a separate process from appealing against the decision itself.

The Commission is also on a drive to boost cross-border trade. It announced another consultation recently, following research that showed that just 8% of consumers buy online from a retailer based in another European Union Member State and that 61% of sellers refuse to deal with a consumer based in another country. The Commission claims that this is due to regulatory and legal concerns or uncertainty. For more on that story, please click here: http://www.mablaw.com/2010/07/european-commission-consults-on-new-eu-wide-contract-law/.

The latest consultation is open to comment until 15 October and can be found here: http://ec.europa.eu/internal_market/consultations/2010/e-commerce_en.htm.

The High Court agreed with the argument that the linked articles must be used to give the meaning of the words the relevant context, although it said that on the facts of this particular case that the meaning of the words was still not sufficiently clear even after looking at the linked articles. A further hearing would be needed to consider the meaning. Of wider importance, though, was the ruling that hyperlinked articles should be considered to give the context to ascertain the meaning of the words. The Court said that an isolated passage of words should not be selected if another relevant section – even if it was a linked article – would throw a different light on the words used.

The terms of the sale of a company’s shares are usually documented in a share purchase agreement (SPA). An SPA will typically list various warranties given by the seller to the buyer. Warranties are effectively promises as to the state of affairs of the company. After completion, if the buyer discovers that a warranty was incorrect as at the date on which it was given, the buyer can use the breach of warranty as the basis for a claim against the seller.

Facts of the case

A recent Court of Appeal decision (Macquarie Internationale Investments Ltd v Glencore UK Ltd) considered whether there had been a breach of a warranty relating to the accounts of the target company. This warranty stated that the accounts:

“give a true and fair view of the assets and liabilities of the Group and/or the Company or the Subsidiary to which they relate as at the Accounts Date and the profits and losses of the Group and/or the Company or the Subsidiary to which they relate (as the case may be) for the Financial Year ended on the Accounts Date (including all related party transactions)”.

After completion, one of the target company’s suppliers produced an invoice relating to services rendered to the company, but which that supplier had mistakenly not produced prior to completion due to an error in loading billing information onto its new computer system.  The invoice came to £3,174,819.91, inclusive of VAT.

The buyer contended that, as a result of the invoice, the seller had breached the accounts warranty, with the effect that the true net asset value of the company was reduced by around 40%.

Decision

At first instance the High Court held that the seller did not have sufficient evidence of its liability to the supplier for the purpose of making a provision in the accounts. The accounts had therefore been prepared in accordance with the relevant accounting standards and there had been no breach of the accounts warranty.

The buyer appealed arguing that whilst it agreed that the accounts had been prepared in accordance with the relevant accounting standards, they did not necessarily give a true and fair view of the company’s assets and liabilities.

The Court of Appeal dismissed the appeal for various reasons including the fact that the seller did not know about, and could not have reasonably discovered, the outstanding invoice at the relevant time. For this reason it could not be said that there was an error in the accounts and it followed that the accounts gave a true and fair view.

Comment

If possible, buyers should request enhanced warranty protection to cover undisclosed liabilities irrespective of whether such liabilities are known to, or reasonably discoverable by, the seller at the relevant time. Whether or not such enhanced protection will be agreed depends upon the relative bargaining strengths of the parties.

The OFT took action against the sites under the Consumer Protection from Unfair Trading Regulations 2008 for being misleading in their presentation as they had copied the EHIC brand, used an official sounding domain name and omitted important information by failing to show that they were not an official provider of EHICs. There was also a failure under the Electronic Commerce (EC Directive) Regulations 2002 to provide certain information in a form and manner which is easily, directly and permanently accessible.

Three of the companies have given formal written undertakings to the OFT to not engage again in deceptive practices, one company has folded and the other has had its domain name suspended by its domain name registrar.

The matter has come to light because Skype has had to admit to the business risks as part of its plans to float. It has also admitted that if Sky wins then this may encourage other third parties to oppose its brand and also for them to take legal actions for trade mark infringement. If Skype loses, this could prove costly and ultimately end up either in a re-brand or a requirement to pay expensive licence fees.

This free event, brought to you by Matthew Arnold & Baldwin LLP, is a chance to get together with local specialists in the HR sector to discuss developments, share knowledge and best practice, and participate in discussions.

Lunch will be provided from 12-12.30pm, with the session ending no later than 2.00pm.

RSVP- please email hong.cameron@mablaw.com

HMRC has indicated that the debt collectors will primarily (but not exclusively) focus on individuals who have smaller debts of up to £2,000; this would mirror the pilot scheme, where debt collectors reportedly focused on individuals who owed, on average, £1,000.

Before debt collectors are instructed, HMRC will write to the errant taxpayer to ask him or her to either pay the outstanding tax or reach an agreement on settling the debt. If the taxpayer does nothing, HMRC will then ask the debt collector to pursue the individual. However, debt collectors will not be allowed to recover debts by seizing an individual’s property, as only HMRC can do this through the courts. HMRC will pay the debt collection companies a percentage of the tax they recover.

The move has angered tax advisers, as HMRC has recently been criticised in the media for wrongly deducting nearly £250m of tax from employees and pensioners. It is therefore quite conceivable (and ludicrous) that a taxpayer who is owed money by HMRC could be pursued by a debt collection agency for unpaid tax.

The credit crunch came along and there were delays by BDW, culminating in Gold purporting to accept BDW’s repudiatory breach of the contract. The High Court agreed with Gold. However, BDW alleged that Gold’s refusal to agree to renegotiate the deal including the minimum prices (to allow the contract to continue after the credit crunch) amounted to a breach of the duty of good faith. The High Court said that was not what was intended by the good faith obligation. Good faith required parties to observe reasonable commercial standards of fair dealing and faithfulness to the agreed common purpose and consistent with the justified expectations of the other party. It did not require one party to renegotiate a contract because the other had made a bad bargain. The duty did not require Gold to give up a freely negotiated financial advantage. The contract also expressly stated that neither party would increase their profits or reduce their losses at the other’s expense.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘With the economic downturn, we have seen a lot of people want to get out of agreements that had been entered into in the good times but which did not seem quite so good when the economic climate deteriorated. This is the latest in the line of cases where the courts have shown an unwillingness to interfere to help someone get out of what had become a bad bargain. In another recent case, the Court refused to allow the economic downturn to be a justification to refuse to perform under force majeure. For more on that case, click here: http://www.mablaw.com/2010/01/economic-downturn-not-a-justification-reason-to-invoke-force-majeure-provisions-%e2%80%93-tandrin-aviation-v-aero-toy-store-high-court/.’

Just when all family solicitors thought nothing could be further from the truth, along comes a decision from the Court of Appeal to make it even less likely and the law even more difficult to predict.   

In the case of Jones v Kernott, the Court looked at this issue yet again. In this particular case, Ms Jones and Mr Kernott had met and gone on to purchase a house together in their joint names. As with most other couples venturing into the world of home ownership, they saw no reason to discuss what would happen in the event of their separation, preferring not to consider this as an option. That being said, to be fair to them at the time, they would probably have agreed that the net sale proceeds should be divided equally. As with so many of these cases, it was not until some time later that one of them decided this was no longer fair or reasonable.  

They separated. Mr Kernott moved out and bought another property. When they separated, it still seemed reasonable to both of them that they should share equally in the net sale proceeds. However, Mr Kernott stopped contributing towards the mortgage, presumably concentrating on paying for his new property – again a perfectly obvious thing to do. Meanwhile, Ms Jones continued to make the payments on the mortgage and the endowment, and paid all other bills without any assistance form Mr Kernott. It seems that this was when her view changed and she felt that she should be entitled to more. However, she did nothing about it until Mr Kernott, some 12 years later, decided to try and recover his half share. Ms Jones issued proceedings, seeking a declaration that she was the sole beneficial owner of the property and entitled to the full net sale proceeds.  

The first and second courts agreed with her, albeit not entirely. Nevertheless they awarded her a 90 per cent interest in the property. The Judges based their decision on the fact that clearly their intentions – that all important word in considering division of property between unmarried couples – had changed and that the court could infer this from the very fact that Ms Jones had taken on responsibility for the mortgage without financial assistance from Mr Kernott. Having decided that there was a change in the parties’ intentions, they then went on to decide the appropriate shares bearing in mind what was “fair and just.”    

However the Court of Appeal overturned the decision and ordered that the parties should be entitled to the property equally. The Court of Appeal was of the view that the court in such applications was not there to re-write the law and could not therefore infer an intention. Had there been a change of intention? Nothing had been discussed. Whilst Ms Jones may have changed her intention, there was nothing to suggest she had ever communicated this to, or agreed it with, Mr Kernott. He was carrying on, blindly assuming that he was still an equal owner as he had been in the past. Indeed it might be said that had he known his lack of attention to dealing with this was eating into his share of the property, he would have acted earlier to realise it – maybe that would not have been in the best interests of Ms Jones, who was of course continuing to occupy the property with the children of their relationship.

The upshot was, however, that the Court of Appeal held that there had been no change in the common intention and that, as a result, they must still own the property in equal shares. In light of the fact that Ms Jones had brought up the children without any financial assistance, not only towards the mortgage and endowment but also in the form of child support, will make this decision seem to most of us grossly unfair, but it just highlights that the courts cannot simply do what may be considered morally right, but must follow the law.

This remains a very difficult area of law to predict and this in itself makes it expensive litigation. If you have any questions concerning this area of law, please do not hesitate to email me at amanda.melton@mablaw.com.

In an earlier round, the High Court agreed with Diageo that sellers of vodkat had been passing their drink off as vodka. ‘Vodka’ had a reputation and goodwill relating to a particular class of clear, tasteless, distilled, high-strength alcohol; vodkat had been marketed in such a way as to deceive a substantial number of members of the public; and sufficient numbers were actually confused, resulting in lost sales and erosion of the distinctiveness of the vodka brand. The High Court ruled that, as with certain other defined classes – like Champagne, Sherry, Scotch Whisky, advocaat and Swiss chocolate in previous court cases – vodka was a clearly defined class of goods too, meaning that vodka traders collectively shared the goodwill in the vodka name.

The ruling was appealed and the Court of Appeal has now upheld the High Court’s ruling. IB argued one point: that the rights for collective distinctiveness applicable to a class of product as in this case should only apply to products having a certain cachet – ie that they were perceived by the public to have a superior quality or be a premium product, and vodka did not have that quality. Nonsense, said the Court of Appeal. There was nothing to suggest that that further hurdle had to be overcome. The Court dismissed IB’s argument that this would open the door to other products sold in large quantities such as white paint arguing the same thing. White paint was a purely descriptive term and paint manufacturers could not argue that they had acquired goodwill in the type of product that was white paint (as opposed to the paint manufacturer’s own particular brand of white paint) in the way that vodka manufacturers had to that collective brand. IB was therefore liable under the extended form of passing off.

Since Diageo won in the High Court and now the Court of Appeal, they could make that a double.

Until recently the answer to that was probably yes. A wife would often trawl through her husband’s financial documents (whilst he was out engaging in what she no doubt described as ‘adulterous activity’) and then deposit a bundle with her matrimonial solicitor to ‘assist’ with disclosure. Invariably the solicitor would advise that the documents must be sent back to the husband, but not before they had taken copies to assist with her case! With hindsight this does seem a little unfair but, on the other hand, as the husband will be under a duty to disclose all of his assets, what is the loss? Unless of course he was not intending to disclose them in the first place!  

What about the position from the husband’s point of view? Having been on the receiving end of this information and now knowing that their client has these assets, his solicitors will almost certainly be duty bound to bring them to the attention of the court, or decline to continue to act if instructed to do otherwise and hence mislead the court.   

Following the ruling by the Court of Appeal this month in the case of Imerman, that seems set to change. In this case, the Court of Appeal effectively said that if a wife (or indeed a husband, if he were so minded) took it upon herself to obtain documentation which was confidential in nature, then the court would not protect her. Contrary to what many may think, there is still a requirement for confidentiality between husband and wife. I should point out that documents left lying around the house may result in the husband having lost his right to them remaining confidential. However, a wife taking this step may well be ordered to hand back those documents without retaining copies and may be prevented from using that information, whether or not later disclosed by the husband, within the divorce process. It is even possible that having handed them over to her solicitor, she may be prevented from using that solicitor.      

The risk therefore is significant. Not only might the wife have prejudiced her position by preventing her solicitor from relying on the information, she could even be forced to start again with a different solicitor. This would be unfortunate when a well-thought-out and well-drafted questionnaire could have produced the same result.   

What is the answer? Seek advice before taking such a step. That must now be the only way to go. There are other ways of approaching non-disclosure and attempts to dissipate assets (for example, making an application for a freezing injunction where there is a genuine risk that the husband is perhaps transferring assets out of the jurisdiction.) Maybe this ruling will add to the number of applications for such injunctions where wives feel that they have no alternative. Watch this space…

Currently in most European countries, following a complaint, Google will act to stop use of another entity’s trade mark as a keyword that generates an advert. That is now changing. Google has extolled the virtues of the new system, by highlighting the fact that Internet users may now be able to see relevant and helpful adverts from resellers, review sites and competitors when users search for a particular brand. Advertisers can still complain if the use of their trade mark generates an advert where the specific text confuses users about the origin of the goods or services and Google will remove the advert if it is not happy. This change will apply to nearly every country in the world.

Meanwhile, Google is making a second change to its keyword policies. In the US, resellers can already use another company’s trade mark in the actual advertising text. This practice will be extended to the UK, Ireland and Canada.

Both changes will come into effect on 14 September.

The logos had some similarities but also some differences. One logo consisted of two ovals that overlapped and the other did not, and Asda’s ovals did not dominate over its famous name that was also present. Therefore, a reasonably circumspect consumer would not have been confused. Likewise, the notional consumer would not have been confused by Asda’s use of Specsavers’ straplines as the advert was clearly by Asda. For the same reason of lack of confusion, the claim in passing off was not made out.

Where Specsavers’ claim succeeded was in relation to the strapline ‘Be a real spec saver at Asda’. This was use of a sign identical with or similar to Specsavers’ registered trade mark where Specsavers had a reputation and the use of the sign was without due cause and took unfair advantage of, or was detrimental to, the distinctive character of the repute of Specsavers’ mark. There was a link as ‘spec saver’ clearly called to mind ‘SPECSAVERS’. Asda had also obtained an unfair advantage by using the strapline to draw on the reputation of the other. This was riding on the back of Specsavers’ coat-tails. Since this was intentional, it was unfair. A second strapline ‘Spec saving at Asda’ was not a problem as the link was much weaker than with the first strapline and any detriment was therefore much less likely.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin and editor of Upload-IT, comments: ‘This case builds on the recent L’Oréal v Bellure and Whirlpool v Kenwood cases. Asda argued that it could not be riding on the coat-tails of Specsavers as they were two very well-known companies. However, the Court said that that was not relevant. Therefore, the recent judicial extension to the application of the unfair advantage law does not depend upon the size or profile of the relevant organisations or whether they are established businesses or new entrants to the market.’

This right is quite new, having only been introduced by the previous Labour government in April 2010, and currently applies to businesses with 250 employees or more, though this is due to be extended to all other businesses in April 2011. Under the right, only employees with at least 26 weeks’ continuous service are entitled to request time off to train, and generally employees can only make one request in any 12-month period. Also, an employee’s request for training must be for the purpose of improving his or her effectiveness at work and to help improve the performance of their employer’s business, although the training need not necessarily lead to a formal qualification. The right does not extend to agency workers.

The decision to consult on this right is part of the Government’s wider belief that employers are burdened by too much regulation; this has, consequently, resulted in Business Secretary Vince Cable recently announcing that a new “one-in, one-out” business regulation system will take effect from 1 September 2010. Under this system, ministers will only be able to introduce a new regulation that imposes costs on businesses if an existing regulation, with an equivalent cost burden, is removed.

The consultation, which seeks views on whether the right to request time off to train should be repealed, retained, extended in 2011 as planned, or modified, closes on 15 September 2010. The Government will then study the comments made and will hopefully publish its response in December 2010. We will of course update you with the consultation’s findings and the course of action that the Government decides to take.

In the meantime, if you have any questions or concerns regarding this consultation or anything else employment-related, please speak to your usual contact at Matthew Arnold & Baldwin, or speak to our employment department on 01923 202020.

The CAP Code is a code of practice governing the content of adverts and marketing communications, and it is administered by the ASA. Although the Code does not have legal force, it is best practice to comply with it, as failure to do so can result in bad publicity and ultimately an inability to obtain advertising space.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This is a tricky one for businesses. It is possible under the Data Protection Act to inform customers who have opted-out of marketing communications, as part of normal contact with them, of a change of service or even a new aspect of the service that they may not otherwise be aware of. But specifically promoting to them or telling them what they are missing is not permitted. It can be a very fine line and a grey area, as this case has shown.’

The High Court had real difficulty. It said that that it was impossible to forecast what the box office takings would have been for a film, especially one that had yet to be finished. It was also impossible to test the claimant’s projections of the likely losses. Projecting the numbers of CDs and DVDs, let alone associated sales such as ringtones and radio income, were just a matter of pure guesswork. However, that should not stop Experience Hendrix from being able to claim any losses, as that would have hit the wrong note entirely. The Court therefore had to find some way of quantifying the losses.

Despite all the speculation over figures, two pieces of evidence enabled the High Court to come up with a figure of lost sales of US$5.8m for the 12 month period following 2010. One piece of evidence was a distribution agreement entered into with a company in 2010 and another was from a rival offer made to the claimant for the DVD and soundtrack rights. The High Court just did the best it could based on those two pieces of evidence. Additional damages would not be awarded as a punishment for flagrant infringement, as The Times had made a genuine attempt to have an appropriate licence.

It is doubtful whether this case or its results would be music to anyone’s ears – whether the fighting parties, judge or even the deceased music star.

On a preliminary hearing on these points (rather than a ruling as to whether the system was actually faulty), the Court of Appeal agreed with the High Court in that a series of minor errors could amount to a fundamental breach. Also, all of the following types of loss did not fall within any of the excluded categories:

• Compensation payments to customers.
• Increased gas distribution charges.
• Employing more staff to deal with doing the things that the IT should have done, and also to deal with customer issues.
• Writing off millions of pounds of unbilled or late bills caused by the IT system not working.
• Paying to investigate and get the IT problem resolved.

In addition, the Court of Appeal said that it was not necessary for the customer to state in their warranty correction notice the nature of the alleged material errors or the serious adverse effect.

The Court of Appeal added that the warranty correction clause was construed as requiring the serious adverse effect of the Fundamental Defect to have been suffered by the customer before the end of the warranty period for the supplier to have to remedy. The idea of a limited warranty period was to draw a line in the sand and not create an indefinite warranty obligation, so even if it was known that a future serious adverse effect would take place, the warranty remedy obligation only applied if the serious adverse effects kicked in before the warranty period expired.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case is interesting for all commercial contracts but especially IT projects (where a number of small errors frequently occurs), particularly for the following two reasons: (1) it shows that breaches which individually are minor can cumulatively mount up to be something entitling the purchaser to more serious remedies; (2) it highlights non-lawyers’ frequent misconception as to what indirect or consequential losses involve, when the reality is that many losses that non-lawyers consider to be ‘indirect’ are really understood at law to be ‘direct’.’

Two sisters had each made a will in 1991.  They had made mutual promises to each other and as part of that had agreed that the will of the survivor would not be altered so as to change those gifts.  The surviving sister did, in fact, alter her will in 2003 and the persons who would have been the beneficiaries under the surviving sister’s original will went to court (after her death) to ask the court to give effect to the 1991 will.

Neither of the wills contained any record that they had been made pursuant to an agreement between the sisters but it was apparent from the provisions of the wills that the terms had been carefully discussed and agreed.  The court was asked to apply the doctrine of mutual wills.

The court ruled that for the doctrine of mutual wills to apply there had to be what amounted to a contract between the sisters that both wills would be irrevocable and remain unaltered.  A common intention, expectation or desire was not enough.  The mere execution of mirror or reciprocal wills did not imply any agreement either as to revocation or non-revocation.  The agreement had to be established by clear and satisfactory evidence on the balance of probabilities.

In the light of the evidence, there had been an agreement between the sisters at the time they had made their 1991 wills.  They had made mutual promises to each other and it was part of those promises that the will of the survivor would not be altered so as to change those gifts.

This case, once again, highlights the importance of proper and qualified legal advice when drafting wills.  None of this would have been necessary if the sisters advisers had ascertained their intentions as to revocation, advised as to the effect of making mutual wills and ensured that any agreement they wished to make was clearly and accurately recorded.

If you want to speak to someone about making a will please contact Suki Sandhu or Emma Alford on 01923 202020 or email info@mablaw.com.

If you have a concern about your entitlement under someone else’s will please contact Amanda Melton on 01923 202020 or amanda.melton@mablaw.com.

The High Court ruled that the retention of title clause was ineffective. A retention of title clause needs to be interpreted in the context of a commercial bargain as a whole. Here, the clause was part of a contract for the sale of stock designed for resale rather than the sale of goods designed for use by a business. The clause was ineffective because it was inconsistent with the parties’ intention for stock to be sold on to customers. The Court added that the termination clause did not help the clause to be enforceable. The Court was particularly influenced by the way the contract had been performed as Sandhu had at no stage sought delivery up of the stock but sought instead to recover monies for the value of the stock sold from the administrators. A retention of title clause is not a right to priority over sales actually made (which would act as a charge) but a right to recover possession of goods.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘Our insolvency lawyers often see cases where clients wish to rely on retention of title clauses when their customers have suffered an insolvency type event. Often, those clauses do not give adequate protection. However, we also see clauses which have been inadequately drafted and try to go further than is allowed and this can render the entire clause ineffective.

‘Given the current fragile state of the economy, retention of title clauses are being closely examined at the moment due to the risks of customers defaulting on payment. They should be closely reviewed and updated by suppliers as necessary in light of the ever-changing case law in this area. It should also be realised that those clauses have limitations to their use and should be seen as one tool in a supplier’s armoury that may include short (or no) credit periods, parent guarantees and risk insurance.’

Playables claimed that it did not know that the devices would be used for an unlawful purpose, as it could be used for legitimate home-made games. However, the High Court rejected that argument. Two provisions of the Copyright Designs and Patents Act 1988 (as amended) were broken. One involved strict liability, meaning that knowledge was not needed – just the fact that the device circumvented the security measures; the mere fact that the device could be used for a lawful purpose was not a defence. Another section of the Act – this time involving knowledge – was also broken because Playables had reason to believe that the device would be used to make infringing copies of the games. The use of R4 cards (which the device contained) was very well known to be used for video game piracy. Given 165,000 devices had been seized and the relatively minor proportion of the market represented by lawful use, it was not credible to argue that Playables did not know the devices would be used for infringing copies. Accordingly, Playables had no realistic prospect of success and Nintendo’s summary judgment application was granted.

The action comes following the European Commission’s other high-profile competition law battles with major IT and Internet players such as Microsoft, Google, Intel and DRAM chip suppliers.

Within the qualifying period, these employers will not have to pay the first £5,000 of Class 1 employer NICs due in the first twelve months of employment. This will apply for each of the first 10 employees hired in the first year of business and operate in selected countries and regions.

Subject to meeting the necessary legal requirements, the scheme is intended to start no later than September 2010. Any new business set up from 22 June which meets the criteria set out in the forthcoming announcement will benefit from the scheme.

The countries and regions which will benefit will be Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.

For more information HMRC have published questions and answers which can be found here.

The High Court said that Dyson’s registered designs had a wide application, so one point scored there for Dyson. The High Court said that in considering the overall impression between the designs of the two vacuums, the informed user would also notice certain similarities, so another point for Dyson. However, Dyson’s claim suffered a knock-out blow when the High Court said that the informed user would also notice main significant differences. Vax could continue to market the product but the victory was delivered with some judicial analysis that they would probably much rather forget, though – the judge said that the overall impression produced by Dyson’s machine was smooth, curving and elegant; whereas MACH ZEN was rugged, angular and industrial. Charming!

A legal victory to Vax then, but they are left in a quandary as to where to go from here: do they continue to market their uglier product (as the court case has given them the green light to do) or do they make the product look more beautiful to try to beat Dyson in the marketplace?

The big news is that companies that fail to register their energy use by next month will be hit with fines that could reach £45,000 under the little-known rules. 

Those that do participate in the Carbon Reduction Commitment (CRC) initiative by declaring their energy use will face charges for every ton of greenhouse gas they produce.  These payments are expected to average £38,000 a year for medium-sized firms, and could reach £100,000 for larger organisations.

Many businesses are (understandably) aggrieved at this prospect fines which will put pressure at a time when bottom lines are shrinking.

Any company or public sector organisation that consumes more than 6,000 megawatt hours (MWh) of energy a year – meaning a power bill of about £500,000 – must register its energy use by the end of next month.  From April 2011, they will need to buy permits for each tonne of carbon dioxide emitted. For those using 6,000MWh, that could mean £38,000.

Of about 4,000 organisations estimated to qualify for the scheme, only 1,229 have registered to date.   Missing the Sept 30 deadline leads to an immediate £5,000 fine, and £500 for each day after that, up to a maximum of £45,000.

Another 15,000 smaller organisations are also required to register and could be expected to buy permits in the future. If they miss the September deadline, they face fines of £500.

For more information click here for the Environment Agency (who administer the scheme).